Distinguishing a Successful Loyalty Program

I get a lot of inspiration from the news, and usually that news is The Wall Street Journal. But it isn’t always a travel story. The Review section in Saturday’s Weekend Journal had an article by Peggy Drexler on bosses choosing favorites in the office that I think has excellent lessons for travel loyalty programs, too. (Subscription required, but email me for a copy.) Really, what does the difference in venue matter? At the end of the day someone in authority is choosing who gets better treatment.

A policy of equal treatment really doesn’t work. With no favoritism, no one has much incentive to outperform or, when traveling, to devote their dollars to one brand over another. Accepting that preferential treatment is necessary, the trick is to ensure that it actually improves productivity (or loyalty) rather than detract from it.

The essential lesson from the article was that everyone likes to be the favorite now and then, and they’re willing to compete to get it. But only if it’s a fair game. One boss admitted that her decisions were arbitrary — some people were her favorites just because they liked cats. You can imagine that someone who doesn’t like cats but otherwise does a great job would feel like the quality of his or her work really wasn’t what the boss was interested in and would slack off as a result. A different boss was upfront about what he was looking for and would publicly praise those employees. But if someone else did a better job next week, the favorite could easily be replaced. His team consistently outdid others in the same firm.

And so it is with loyalty programs to some extent. My favorite loyalty programs are not necessarily those with the most generous benefits. I am willing to go out of my way and occasionally spend more than what the competition requests in order to reward those companies that offer consistent andpredictable service or products.

I left Bank of America and their inconsistent customer service even though they had better branch locations than Wells Fargo. I left AT&T for Verizon because AT&T kept changing its story when I asked how much their new service cost. I even switched airport parking lots from Thrifty to WallyPark not necessarily because WallyPark was cheaper (this was before I learned about stacking coupons) but because their shuttles actually ran on a schedule.

I think American Airlines has a great program, for example, but I don’t know what is going to happen in the next few months with the merger. The bankruptcy scared me off last year, and now there’s a merger with US Airways, an airline I absolutely hate. United Airlines, well… maybe it’s not the best but I know what to expect. It is consistent enough in the areas that matter to me, and I know how to use its benefits scheme to my advantage.

A better example is hotels. Inside Flyer magazine is doing a survey on MilePoint of people’s perceptions of Hyatt’s Gold Passport program. There’s some argument going on right now comparing it to Hilton, but a common theme in the proponents’ claims is that Hyatt makes modest promises and consistently meets or exceeds them. It’s my reason for making them my primary hotel chain even if I do have interest in a few others like Starwood and Kimpton.

I don’t think I’ve ever had to argue with a Hyatt employee who was refusing to honor my elite benefits. I earned the status expecting to be rewarded for it. They seem to understand that. With some other companies, it feels like there are sometimes other criteria I’m not aware of keeping me from what should be mine.

Anyway, that’s what I was thinking about as I read that article in WSJ while returning home from an excellent experience at the Hyatt Regency Wichita, one of the few Hyatt properties that explicitly does not honor suite upgrades for Diamond members. They still left me feeling like a million bucks by paying such close attention to all the other perks (and that policy against Diamond upgrades is disclosed reasonably well). That’s what matters when I judge a loyalty program: transparency and follow-through.

Quality still matters, but I was willing to overlook a few of the Hyatt Regency’s flaws, just as I’m willing to overlook Hyatt’s small global footprint and their recently unimpressive promotions, because I know that they’re not going to make me run through hoops. I was mad when Hyatt gave away 50,000 United miles to random customers last year not because I wasn’t chosen but because it was so uncharacteristic of them to make an arbitrary decision. Fortunately they don’t do that very often.

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